White House Deploys AI Against $26B Tariff Dodging

The White House accused China and more than 40 other countries Thursday of routing goods through third nations to dodge U.S. tariffs, a practice it says costs the Treasury $19 billion to $26 billion a year.

The report, released by senior trade counselor Peter Navarro, was paired with a pilot program that would use artificial intelligence to spot the shipments at the border.

The Numbers

Lost tariff revenue: $19 billion to $26 billion annually, according to the report cited by Reuters, the Associated Press and CTV News.

The report identifies more than 40 countries posing elevated transshipment risk, Fox News reported.

Wire's summary of the report puts illegally transshipped goods at roughly $75 billion a year and attributes about 450,000 lost U.S. jobs to the practice, naming China, Mexico and India as top transshippers and Vietnam as a top enabler.

How the Scheme Works

Transshipment means shipping a Chinese-made good to a third country, doing packaging or limited assembly there, and relabeling it as originating in that lower-tariff country.

PBS NewsHour reported the White House traces the pattern to 2018, when China responded to Trump's first round of tariffs by sending goods to nations ranging from Mexico to Malaysia for packaging and light assembly.

Determining country of origin is legally messy when a product contains parts from several countries. Importers caught falsifying origin face retroactive collection of the higher tariff rate on all shipments from the prior year.